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  • RBC Capital analyst Rishi Jaluria downgraded Fastly, Inc FSLY to Underperform from Sector Perform with a price target of $9 (22% downside), down from $17.50.
  • The analyst attributed the downgrade to three primary reasons.
  • Firstly, the company’s business is recession-prone due to its consumption-based model, high start-up exposure, lack of profitability, and the pricing-sensitive nature of CDN, Jaluria reasoned.
  • Secondly, its CEO position remains vacant, causing an unclear turnaround path and making it harder for Fastly to catch up with Cloudflare, Inc NET on the edge computing opportunity.
  • Thirdly, its security portfolio lags peers, with little likelihood for changes given the near-term lack of funding (low cash balance, unprofitable, and stock down materially).
  • Fastly will have to be more acquisitive to become a more serious contender in security, as per Jaluria.
  • Price Action: FSLY shares traded lower by 5.41% at $11.53 on the last check Tuesday.

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